Question

Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invest. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a ______________________in this partnership.

A) General partner
B) Preferred stockholder
C) Secondary partner
D) Limited partner

Answer 1

D) Limited partner

Step-by-step explanation:

Travis has chosen to be a limited partner in this business. A limited partner invests capital in a business but is not actively involved in the daily operations of the business. The partnership agreement allows the limited partner to share profits. However, if the business makes losses or has assets that are not enough to cover its debts, the general partner who actively manages the business has unlimited liability but a limited partner would not be liable for the debts beyond his/her invested amount.